Sunday, December 2, 2012

Housing prices drop by 30 per cent

House and land prices
have declined by around 30 per cent as compared to last year, whereas
transaction has dropped by almost half, according to a central bank survey.

Some 43 per cent
developers expect prices of land and housing to go up by 15 per cent to 30 per
cent, the survey revealed, adding that a very few –around 22 per cent of them
– still expect prices to go down, whereas some 35 per cent expect no movement
in the prices anytime soon within six months to a year.

"Similarly, land
and housing transactions have dropped by 40 per cent to 50 per cent due to lack
of finance that was earlier easier to obtain from banks and financial
institutions," it said, adding that some 44 per cent developers expect
real estate business may not see any remarkable progress any time soon due to
problems related to bank loans, tax on capital gain, source of income
verification, and no basis for price determination.

"The remaining 40
per cent of the developers expect transactions to pick up by around 20 per
cent," said the central bank's quick field survey of Land Offices,
municipalities, urban development agencies, members of district chambers, and
land and housing developers in 10 major districts — Morang, Dhanusha, Parsa,
Rupandehi, Kaski, Banke and Kailali — including three districts in the valley
– Kathmandu, Lalitpur and Bhaktapur – to gauge the risks due to higher
exposure of banks and financial institutions in a single sector.

Land and housing
witnessed a surge in price a couple of years back instigating a bubble.

The central bank
conducted the study after most banks and financial institutions got trapped in
the bubble, posing threats of a systemic failure in the financial system, it
said.

However, housing
entrepreneurs still believe that the government's policy laxity in framing a
clear and stable real estate policy has hit business hard, making them struggle
to pay even the interest on loans taken from banks and financial institutions.

Likewise, the report has
also revealed that revenue from land and housing dropped by 41.89 per cent in
the last fiscal year as compared to a fiscal year ago.